Multilateral economic sanctions can be expected to impose greaterterms‐of‐trade effects on a target nation than unilateral sanctions. Yet despite their potential for greater economic damage, multilateral sanctions often are less effective in bringing about desired political results in the target. An interest‐group model of endogenous policy suggests that multilateral sanctions can undermine the political effectiveness of opposition groups in the targetcountry, or strengthen those groups supporting the objectionable policy of the ruling regime. Such perverse effects are due in part to the inability of multilateral coalitions to enforce cooperation among members, and to the appropriation of sanctions rents in the target country. Unilateral sanctions, however, imposed by a country with close ties to the target, are ofteneffective in achieving their intended political objectives.
Wintrobe's (1990Wintrobe's ( , 1998 dictatorship model is adapted to examine the impacts of economic sanctions on an autocrat. It is shown that the dictator's choice of the level of power, and the quantities of loyalty and repression used as inputs in the production of power, are affected by the type and magnitude of sanctions and by the impact of sanctions on the political effectiveness of opposition groups. Sanctions have direct and indirect effects on the prices of loyalty and repression as well as potentially generating rents that might be captured either by the dictator or by the opposition.
The literature on economic sanctions suggests that the choice of policy instrument, for example trade sanctions, financial sanctions, or military intervention, is endogenous to the political process and, in particular, to the policy outcome sought by the sanctioner. But the choice of instrument also affects the outcome of the sanctions. Therefore, the sanctions policy outcome and the probabilities of the sanctioner's adoption of different sanctions instruments are jointly determined. To capture this endogeneity, multivariate probit and logit models are estimated using data from Hufbauer, Schott & Elliott, with the random utilities to the sanctioner of choosing military action, trade sanctions, and financial sanctions as dependent variables. The expected probabilities of choosing these alternatives are then incorporated as explanatory variables in predicting the success of the sanctions in attaining their political objectives. This procedure generates simultaneous estimates of the determinants of both instrument choice and sanctions success. The empirical results indicate that military force is less likely to be used against an economically healthy and politically stable target than against a more vulnerable target. However, military action is encouraged by third-country assistance to the sanctioned country and by a high cost of sanctions to the sanctioner. Financial sanctions are more likely to be used against a target that receives third-country support but are less likely against an economically healthy country. Sanctions success is positively correlated with the degree of warmth in relations between sanctioner and target prior to the sanctions; negatively correlated with the size of the sanctioner relative to the target; and negatively correlated with the economic health and political stability of the target. There is no evidence that third-country assistance to the target diminishes the effectiveness of sanctions or that the cost of sanctions to either the target or the sanctioner has a strong effect on the sanctions outcome.
South Africa's apartheid system was enormously costly and ultimately collapsed because the inefficiencies created by apartheid policies escalated as the economy's structure changed. Labor market regulation and industrial decentralization policy inhibited efficient resource utilization, especially as the manufacturing sector became dominant. Apartheid educational policies generated skill shortages. A mercantilistic development strategy distorted trade patterns, exacerbated dependence on foreign capital inflows, and created chronic balance of payments difficulties. The administrative and defense costs of implementing apartheid were onerous and rising. These internal weaknesses enhanced South Africa's vulnerability to capital flight, changes in world prices and business cycle conditions, and political changes abroad. Ultimately, apartheid was abandoned because its costs came to exceed its benefits to white South Africans. The internal dynamics of the system dictated the retrenchment of apartheid, which in all probability would have occurred even without foreign sanctions Copyright 1997 Western Economic Association International.
Pressure for divestment and mandatory disinvestment sanctions directed against South Africa are an instance of domestic interest groups in one country seeking policy change in another. The link from shareholder divestment to disinvestment by firms is tenuous, however (since South Africa-active firms do not seem to suffer as a consequence of divestment pressure), and legislated sanctions are likely to have unpredictable and sometimes perverse effects on the extent of apartheid practices.
SUMMARY
Many advocates of sanctions against South Africa have proposed that such measures will reduce the wealth of white South Africans and thereby raise the costs of apartheid to those who benefit from it by such a large amount that whites will voluntarily choose to terminate the apartheid system. This paper examines the likely effects of disinvestment sanctions on the survivability of apartheid. An ‘interest‐group’ model of the South African state is developed, in which apartheid policies are treated as endogenous outcomes of a political decision‐making process. The effects of sanctions are introduced through the impact of international capital flows and asset prices on the major interest groups within the white electorate. It is shown that disinvestment policies may not diminish apartheid via market effects, but could have an impact upon the political costs of maintaining apartheid institutions.
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